China’s Didi Chuxing discloses US$585m loss in first half amid safety crisis as founder tells staff ‘we’re not evil’
The voluntary disclosure offers a rare glimpse into the financial state of the privately held firm as it tries to shore up public confidence following the deaths of two female passengers
Didi Chuxing, China’s largest ride-hailing platform, has not made a profit in the six years since its founding and recorded a net loss of 4 billion yuan (US$585 million) in the first half of the year, Didi founder and chief executive Cheng Wei disclosed in a letter to employees on Friday.
The voluntary disclosure offers a rare glimpse into the financial state of the privately held firm as it tries to shore up public confidence following the alleged rape and murder of a female passenger by one of its drivers, the second in three months.
“Didi is by no means an evil company, and would never prioritise generating profit above anything else,” Cheng said in the letter. “We have not been profitable over the past six years.” The letter, leaked to local Chinese media and published on the Tencent News website, was confirmed as authentic by a Didi spokesperson.
The Beijing-based company’s margin is only 1.6 per cent of the gross merchandise volume, while discounts and subsidies for passengers and drivers amounted to 11.7 billion yuan in the first half of the year, according to Cheng.
“As a platform that handles hundreds of millions of rides we will continue to operate on a low margin and spend more in improving safety and service experience,” the chief executive said.
"I think you are, like me, immersed in the deep sorrow of the tragedy. Didi is rocked by doubters. I feel responsible. All problems are leaders' problems. I shall take the primary responsibility for the incident, and there's no shirking from it.
“Despite the questioning over our safety, we still see a lower [crime] case rate than the traditional taxi industry, and a 100 per cent success rate in [solving cases]."
Didi, which pushed Uber Technologies out of the Chinese market in 2016, has set up a “command office” to oversee the safety overhauls, with Cheng as its head, and is “all-in” when it comes to safety, according to the letter.
An inspection team led by China’s Ministry of Transport launched two weeks of on-site checks at Chinese ride-hailing companies on Wednesday, with Didi its first stop.
Earlier this week, the company decided to suspend all late night ride-hailing services on the Chinese mainland for one week as it overhauls its safety practices.
The week-long halt in late-night services, starting Saturday and effective from 11pm to 5am, will allow Didi to phase in added safety measures, including upgrading an in-car panic button linked directly to police. It will also trial in-trip audio recording and tighten up background checks of drivers by using a risk assessment model based on big data and facial recognition.
In his letter Wei said the company processes about 2.1 million calls on an average day, including 10,000 emergency calls for help, and screens out more than 40,000 drivers a day that fail to pass its qualification test.
Separately, the company pledged to spend 140 million yuan to strengthen its customer service and expand the in-house team from 5,000 to 8,000 people by year end.
The efforts come in the wake of the second alleged murder of a passenger by her Didi driver, highlighting how its previous efforts to improve passenger safety failed to prevent the crime. A review of public court records by the Post showed at least a dozen previous sexual assault convictions involving Didi drivers and their passengers.
Police in Yueqing city, in China’s eastern Zhejiang province, last month found the body of a 20-year-old female surnamed Zhao, and arrested a Didi driver who confessed to her rape and murder.
In May, another woman, aged 21, was raped and killed in Zhengzhou, in central China, allegedly by an unregistered Didi driver. Her body was later found in a river.
Didi, which counts tech giants Tencent Holdings, Baidu and Alibaba Group Holding as its shareholders, is said to be exploring an initial public offering and is locked in an ongoing battle with emerging rivals including DiDa Chuxing, UCAR, Geely’s Caocao Car and Meituan Dianping in ride-hailing. The latter is expected to list later this month.
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